Tuesday, May 03, 2016

Hulu Hopes To Grab Pay-TV Cord-Cutters

On May 1, 2016, Hulu announced a new service aimed at cord-cutters. The unnamed subscription service would stream feeds of popular broadcasts and pay-TV channels, making the company a competitor to traditional pay-TV providers. Walt Disney Co. and 21st Century Fox, co-owners of Hulu, are working on agreements to license many of their channels for the platform. Comcast Corporation, another co-owner of Hulu, has yet to announce if it will participate in the service with its NBC programming.
Pay-TV providers are developing streaming services to increase their number of consumers. Dish Networks, Comcast, and AT&T-DIRECTV all offer curated streaming programs. Because one-in-seven Americans are “cord-cutters,” meaning they no longer have a traditional pay-TV subscription, online offerings allow pay-TV providers to gain back some of their former subscribers.
Hulu’s new service is not an attempt to regain former subscribers. Instead, it hopes to grab cord-cutters from the entire video marketplace. Hulu’s service could become the standard for streaming live television because it would not require a specific Internet service provider, and because it could pull programming from three of the biggest content companies - Disney, Fox, and NBC.
This transition from pay-TV to streaming services within the video marketplace is a response to the increasing number of cord-cutters. There is no doubt that the video market is moving online, but the FCC recently proposed to lock in old technology and add unnecessary regulations to set-top boxes. These regulations would not only create costs that could stifle this innovative transition, but they would allow 3rd parties to reap the benefits of content creators’ intellectual property rights.
See our infographic on the FCC’s proposal and our comments submitted to the FCC regarding expanding consumers’ video navigation choices and commercial availability of navigation devices.

Tuesday, April 26, 2016

World IP Day

Today is World IP Day!
World IP Day is an opportunity for ordinary people to take a step back and consider all the economic benefits that have resulted from strong protections of intellectual property rights. It’s an opportunity to promote greater public understanding about the importance of IP rights.
Strong protections of IP rights are important for ensuring that creators, content providers, artists, innovators, and marketers can earn a return on their creative works and the labor that makes them possible. Protection of IP rights incentivizes more innovation, investment, and economic growth. 
FSF President Randolph May and Senior Fellow Seth Cooper coauthored two recent Perspectives from FSF Scholars regarding intellectual property rights.
Randolph J. May, Seth L. Cooper, “George Washington: Indispensable to Intellectual Property Rights in America,” Perspectives from FSF Scholars, Vol. 11, No. 9, (February 26, 2016).
Randolph J. May, Seth L. Cooper, “The Public Contract Basis for Intellectual Property Rights,” Perspectives from FSF Scholars, Vol. 11, No. 13, (April 19, 2016).
Also, remember to check out their book on Amazon entitled “The Constitutional Foundations of Intellectual Property: A Nature Rights Perspective.” 

Tuesday, April 19, 2016

NTIA Study Shows Mobile Is a Substitute for Fixed at All Income Levels

A new study by Guilia McHenry, the Chief Economist in the Office of Policy Analysis and Development at the National Telecommunications & Information Administration (NTIA), shows that consumers of all income levels are substituting mobile broadband for fixed broadband. Brian Fung highlighted some of the study’s findings in a Washington Post article:
In 2013, 8 percent of households making $50,000 to $75,000 a year were mobile-only. Fast-forward a couple of years, and that figure now stands at 18 percent. Seventeen percent of households making $75,000 to $100,000 are mobile-only now, compared with 8 percent two years ago. And 15 percent of households earning more than $100,000 are mobile-only, vs. 6 percent in 2013.
As Randolph May and I wrote in a January 2016 blog, the number of “smartphone-only” adults has been increasing over the past several years. This NTIA study shows that consumers who substitute mobile broadband for fixed broadband are not only low-income individuals but those further up the income scale too.
It is time for the FCC to recognize this shift in consumer preferences and take into account the actual realities and competitiveness of the broadband marketplace when it considers imposing regulations on Internet service providers.

Tuesday, April 12, 2016

"Walking Dead" Producer Fears FCC's Set-top Box Proposal

Today, “Walking Dead” producer Gale Ann Hurd published an op-ed in USA Today expressing concern over the FCC’s recent proposal to regulate set-top boxes. Ms. Hurd explains that the FCC’s proposal would require set-top boxes to show and prioritize illegal content alongside legal content. She says the proposal “will make piracy as easy and dangerous in the living room as it is on laptop and mobile devices.”
Ms. Hurd hits the nail on the head. In a February 2016 blog, FSF Senior Fellow Seth Cooper stated that the FCC’s proposal to “unlock the box” would actually unlock copyright protections for video content.
Additionally, in a February 2016 Perspectives from FSF Scholars entitled “FCC’s Cognitive Dissonance Leads to Regulatory Policy Run Amok,” FSF President Randolph May revealed that in June 2015 the Commission found local video markets to be effectively competitive, but now, just seven months later, the FCC proposes regulations. Despite what FCC Chairman Tom Wheeler claims about the video device market, a look at set-top box prices shows no monopoly power. In fact, as we showed in a recent infographic, consumer choices in the video market continue to grow because of market-driven innovation and technological advances.
As Ms. Hurd states in her op-ed, most people agree that piracy is a serious problem. And if you can agree that piracy is a serious problem, then it should be obvious that the FCC should not adopt regulations that would enable the posting and dissemination of illegal content.

Thursday, April 07, 2016

Regarding FCC Internet Regulation, "Watch What We Do"!

For those of you too young to recall, John Mitchell, Richard Nixon’s infamous Attorney General, famously advised the press: “Watch what we do, not what we say!” 
This turned out to be good advice back then. 
In a similar vein, it is wise to watch what the Federal Communications Commission and Tom Wheeler, its Chairman, do with regard to the regulation of rates for broadband Internet services in the wake of the FCC’s February 2015 decision subjecting Internet service providers to so-called “Title II” regulation. This, of course, is regulation akin to the public utility regulatory regime applied to the railroads in 1887 and the Ma Bell monopoly in 1934. 
On February 4, 2015, shortly before the FCC adopted its Title II regulation order, Chairman Wheeler stated in a piece he wrote for Wired: “[T]here will be no rate regulation, no tariffs, no last-mile unbundling.” 
In his official statement accompanying the Title II regulation order adopted on February 26, 2015, Chairman Wheeler declared: “That means no rate regulation, no filing of tariffs, no network unbundling.” 
According to an Ars Technica piece published on March 3, 2015, referring to the Title II regulation order, Mr. Wheeler stated: “This is not regulating the Internet. Regulating the Internet is rate regulation, which we don’t do….” 
If you like, you can find other statements to similar effect. 
I said at the time the FCC adopted the Title II regulation order – and many, many times since –that the FCC’s action would lead to “rate regulation” of Internet services, regardless of whatever the FCC called its actions. I explained that subjecting interconnection arrangements to Commission intervention would lead to regulating interconnection rates. That banning paid prioritization is rate regulation. That prohibiting, or even curtailing, so-called zero-rating and sponsored data is rate regulation because the FCC will be dictating the structure of the usage tiers and rate caps in subscribers’ service plans. 
Perhaps the meaning of “rate regulation” is like the meaning of “is.” It all depends. (Again, for those of you too young to recall, Bill Clinton famously said, by way of attempting to explain his way out of a hot spot, that, “It depends on what the meaning of ‘is’ is.”) 
Regarding the FCC’s Title II regulation order, I was pleased to see that, this week, in opposing a legislative provision intended to prohibit broadband rate regulation by the Commission, Mr. Wheeler provided a bit more clarity – or perhaps I should say “reality” – as to the meaning of his earlier “no rate regulation” pledges. According to a report in the April 6 edition of Communications Daily [subscription required], Mr. Wheeler said this at a congressional hearing: 
“Because at the heart of everything is rates. So paid prioritization is a rate issue. Throttling is a rate issue. Blocking is a rate issue. Interconnection is a rate issue.” 
This is true. This is reality – at the heart of all the actions that Mr. Wheeler identifies, and others, “is rates.” And, of course, so are any actions that curtail or alter the various zero-rating plans now under Commission examination, if not formal investigation, or that impact usage tier charges. 
I’m pleased, in a way, that, in trying to fend off “no rate regulation” legislation, Mr. Wheeler at least is now acknowledging that much of what the Commission majority did in adopting the Title II regulation order either presently amounts to rate regulation or likely will lead to rate regulation. I just wish he had been more forthright about the matter at the time of the FCC’s February 2015 action. 

Going forward, with regard to the FCC’s actions regulating the Internet, it will pay to heed of John Mitchell’s advice: “Watch what we do, not what we say.”

Wednesday, March 30, 2016

FCC Auction Staff -- Thanks for the hard work!

Often enough -- more than I would like -- I'm in the position of criticizing the FCC's leadership for what I consider to be a seemingly endless string of unduly regulatory decisions that fail to account for the increasingly competitive communications marketplace.

Not today.

I just want to stop what I'm doing, as the Commission's incentive spectrum begins, to praise the FCC's auction staff, and especially Gary Epstein, the chair of the agency's Incentive Auction Task Force, for the very hard work that has brought us to this point.

I don't know the extent to which the incentive auction will meet expectations (whatever they are) in order to be considered a slam-bang success. But it is a very important - yet very complicated endeavor. And for the sake of meeting the continued and growing need for more spectrum to meet rapidly expanding wireless broadband demands, I sure hope the auction is successful.

There are aspects of the auction design that I would have done differently. This is certainly true of some of the commissioners as well. Nevertheless, come what may, the FCC commissioners and staff deserve thanks for their hard work on the project over many long months.

And, most of all, Gary Epstein, Howard Symons, and all the FCC staff deserve our gratitude for their dedication to doing all that was required to get us to the starting gate!